Department of the Treasury OIG OIG-CA-22-020 (Inquiry on Use of Pandemic Relief Funds for Increased Broadband Access to Unserved Communities)
Summary
Letter OIG-CA-22-020 of the Department of the Treasury Office of Inspector General, dated August 30, 2022, over the name of Richard K. Delmar, Deputy Inspector General, to Michael E. Horowitz, Chair of the Pandemic Response Accountability Committee (PRAC). It responds to a request from the Ranking Member of the Senate Committee on Commerce, Science, and Transportation for a study of programs funding broadband services. The letter states that the Capital Projects Fund provides $10 billion for states, territories, and tribal governments, and that Treasury encourages investments in locations without reliable wireline speeds of 100 Mbps download and 20 Mbps upload. In its response, Treasury states that it believes its framework is appropriate and sufficient and does not believe additional protections are required at this time.
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“Department of the Treasury OIG OIG-CA-22-020 (Inquiry on Use of Pandemic Relief Funds for Increased Broadband Access to Unserved Communities).”
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DEPARTMENT OF THE TREASURY
WASHINGTON, DC 20220
August 30, 2022
OFFICE OF
INSPECTOR GENERAL
The Honorable Michael E. Horowitz
Chair
Pandemic Response Accountability Committee
Council of the Inspectors General on Integrity and Efficiency
441 G St, NW, Suite 1517
Washington, DC 20548
Re: Inquiry on Use of Pandemic Relief Funds for Increased
Broadband Access to Unserved Communities (OIG-CA-22-020)
Dear Inspector General Horowitz:
This letter is in response to a request from the Ranking Member of the Senate
Committee on Commerce, Science, and Transportation (Committee) to the
Pandemic Response Accountability Committee (PRAC) to prioritize a study of
programs funding broadband services and coordinate reviews among the oversight
community (see attachment). To assist the PRAC with the request, we obtained
responses from the Department of the Treasury’s Office of Recovery Programs
(ORP) to questions specifically directed at Treasury’s role in ensuring that
broadband funding serves unserved persons or communities. 1 Significant to
creating and delivering broadband services are Treasury’s Coronavirus State and
Local Fiscal Recovery Funds (SLFRF) and the Capital Projects Fund (CPF)
authorized under of the American Rescue Plan Act of 2021 2 (ARPA) over which
Treasury Office of Inspector General (OIG) has oversight.
In its response, Treasury’s ORP highlighted the following to provide context to its
responses.
• Statutory Language: The ARPA statutory language for both the SLFRF
and CPF is significantly less prescriptive than the statute for programs
like the National Telecommunications and Information Administration’s
(NTIA) Infrastructure Investment and Jobs Act (IIJA) Broadband
1
Questions related to serving unserved communities are listed under 1. a. through h. in the attachment.
Questions 2 and 3 are not directed to Treasury for response.
2
P.L. 117-2 (March 11, 2021)
0
Equity, Access, and Deployment (BEAD) Program. Under the statute,
SLFRF can fund “necessary” investments in broadband infrastructure,
and CPF can fund “critical capital projects directly enabling work,
education, and health monitoring, including remote options.” The
statute does not direct eligible areas for investment or speed
standards, unlike the IIJA funds.
As Treasury was setting up the programs and making policy decisions,
management recognized that Congress provided flexibility in the statute
with the context that these are pandemic relief programs with other
eligible uses beyond broadband infrastructure (in the case of SLFRF,
dozens of eligible uses beyond broadband infrastructure).
• CPF – Flexibility/Discretion: The CPF offers broad flexibility for states
to meet critical needs they identify within their own states by
providing $10 billion for states, territories, and tribal governments to
pursue investments in critical capital projects that directly enable work,
education, and health monitoring, including remote options, in
response to the public health emergency. The CPF allows for
investments in broadband infrastructure, among other allowable uses.
For broadband infrastructure projects, Treasury encourages recipients
to prioritize investments in locations without access to reliable wireline
speeds of 100 Mbps 3 download and 20 Mbps upload (also referred to
as 100/20 Mbps) and provides discretion for recipients to determine
communities with a critical need for buildout. 4
• CPF – “Additional Public Benefit”: Treasury has chosen, as a policy
matter, to allow funding in places where other federal funds have been
committed, if states identify an “additional public benefit” and justify
the investment is for “complementary purposes”.
• SLFRF – Flexibility to recipients: Treasury made a policy decision to
provide greater flexibility to recipients and took that reasonable policy
choice after consulting with interagency partners, stakeholders, and
3
Megabit per second is a unit of data transfer rate equal to 1,000,000 bits per second.
4
For CPF recipients, “the construction and deployment of broadband infrastructure projects (“Broadband Infrastructure
Projects”) are eligible for funding under the Capital Projects Fund program if the infrastructure is designed to deliver, upon
project completion, service that reliably meets or exceeds symmetrical download and upload speeds of 100 Mbps. If it would
be impracticable, because of geography, topography, or excessive cost, for a Broadband Infrastructure Project to be designed
to deliver services at such a speed, the Project must be designed so that it reliably meets or exceeds 100 Mbps download
speeds and between 20 Mbps and 100 Mbps upload speeds and be scalable to a minimum of 100 Mbps symmetrical for
download and upload speeds.” https://home.treasury.gov/system/files/136/Capital-Projects-Fund-Guidance-States-
Territories-and-Freely-Associated-States.pdf).
1
state and local governments (including as part of reviewing comments
during the public comment process for the final rule 5).
o During this process, Treasury received widespread feedback
asking for flexibility for recipients to determine where to make
broadband investments. This reflects the wide diversity of
challenges confronting communities in expanding broadband
access (like reliability of service in addition to coverage) and the
broad range of governments that receive SLFRF funds, including
localities with issues beyond the maximum speed of what a
network can nominally provide. It is well documented that the
broadband sector suffers from reliability and affordability
challenges.
o The final rule encourages recipients to prioritize investments in
locations without access to reliable wireline service of 100
Mbps download and 20 Mbps upload but provides flexibility for
them to identify areas of additional need beyond those locations.
In addition, Treasury has laid out a set of safeguards when
funding projects in areas with enforceable commitments to build
new networks. 6
o This policy approach, in Treasury’s view, is critical to effectively
bridging the digital divide in an equitable manner.
Committee Questions and Responses
1. Ensuring that funds serve unserved communities:
a. Are state, local, and tribal governments using money from the Treasury for
broadband infrastructure funding projects in areas with existing broadband
networks or enforceable commitments to build new networks?
• If so, where is this occurring?
• What is the reported rationale for duplicating funding investments in
these areas?
5
31 CFR Part 35, Coronavirus State and Local Fiscal Recovery Funds Final Rule (January 27, 2022).
6
For SLFRF, “recipients are required to design projects to, upon completion, reliably meet or exceed symmetrical 100 Mbps
download and upload speeds. In cases where it is not practicable, because of the excessive cost of the project or geography
or topography of the area to be served by the project, eligible projects may be designed to reliably meet or exceed 100/20
Mbps and be scalable to a minimum of symmetrical 100 Mbps download and upload speeds.”
(https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-Overview.pdf)
2
Treasury Response:
Under the SLFRF rule and CPF guidance, recipients may pursue broadband
infrastructure projects that provide service to locations with an identified
need for investment. Program requirements are outlined in the SLFRF rule
and CPF guidance, and align with Administration broadband priorities to
increase access, affordability, and equity. Specifically:
• Under the SLFRF program, recipients are encouraged to prioritize
projects that are designed to serve locations without access to
reliable wireline 100/20 Mbps broadband service. More broadly,
recipients are required to invest in projects that provide service to
areas with an identified need for additional broadband investment.
Consistent with Administration priorities on broadband, examples
of need include lack of access to a reliable high-speed broadband
connection, lack of affordable broadband connection, or lack of
reliable service. For recipients that are considering deploying
broadband to locations where there are existing and enforceable
federal or state funding commitments for reliable service of at
least 100/20 Mbps, recipients must ensure that SLFRF funds are
designed to address an identified need for additional broadband
investment that is not met by existing federal or state funding
commitments. SLFRF funds must also not be used for costs that
will be reimbursed by the other federal or state funding streams.
Eligible SLFRF-funded broadband projects must generally meet an
affordability requirement and be designed to reliably meet or exceed
symmetrical 100 Mbps download and upload speeds where
practicable.
• Under the CPF program, eligible broadband infrastructure
projects must serve communities identified to have a critical
need for those projects related to access, affordability,
reliability, and/or consistency. Recipients are encouraged to
prioritize projects that are designed to provide service to
households and businesses not currently served by a wireline
connection that reliably delivers at least 100/20 Mbps.
To the extent that recipients are considering deploying broadband to
locations where there are existing enforceable federal or state funding
commitments for reliable wireline service at speeds of at least 100/20
3
Mbps, the recipient should ensure that CPF grant funding will not be used
for costs that will be reimbursed by the other federal or state funding
streams. That is, CPF grant funds must be used only for complementary
purposes. Recipients must ensure there is additional public benefit and a
justification for using additional public funding to deploy to those locations.
For SLFRF, Treasury began distributing funds in 2021 and is receiving
information about the use of those funds through recipient reporting
procedures.
• While Treasury received reporting from certain tiers of recipients
in January 2022, the first Project and Expenditure (P&E Report)
data for all recipients was due on April 30, 2022. The initial
reviews focused on data integrity issues, rather than the
substantive uses. Treasury will continue to review P&E Report
data as it is submitted. 7
• At this time, Treasury has not identified any proposed or
ongoing broadband projects occurring in areas with existing
broadband networks or enforceable commitments to build new
networks through the recipient reporting process, although
management would note that it is at the initial stages of its
compliance process.
• If such projects were identified, Treasury would evaluate the
use through its compliance procedures to determine whether
the use is consistent with the Final Rule and guidance, which
requires such funds to be used to meet an “identified need for
additional broadband investment that is not met by existing
federal or state funding commitments” and prohibits SLFRF
funds to be used for costs that will be reimbursed by the other
federal or state funding streams.
7
Tier 1 includes states, U.S. territories, metropolitan cities and counties with a population that exceeds
250,000 residents. Tier 2 includes metropolitan cities and counties with a population below 250,000
residents that are allocated more than $10 million in SLFRF funding, and non-entitlement units of government
(NEU) that are allocated more than $10 million in SLFRF funding. Tier 3 includes Tribal governments that are
allocated more than $30 million in SLFRF funding. Tier 4 includes Tribal governments that are allocated less
than $30 million in SLFRF funding. Tier 5 includes metropolitan cities and counties with a population below
250,000 residents that are allocated less than $10 million in SLFRF funding, and NEUs that are allocated less
than $10 million in SLFRF funding. P&E Report data is due on a quarterly basis 30 days after the end of each
quarter for tiers 1, 2, and 3, and annually for tiers 4 and 5.
( https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf)
4
• The current recipient reporting guidance requires reporting on a
number of broadband elements, but as Treasury has stated in
its compliance and reporting guidance, additional programmatic
data will be required for broadband projects in upcoming
reporting cycles.
• Further, Treasury voluntarily signed a Memorandum of
Understanding (MOU) on May 12, 2022, with the Federal
Communications Commission (FCC), NTIA, and United States
Department of Agriculture (USDA) to, among other things,
develop consistent and complementary reporting processes and
share information with each other about broadband projects.
CPF is in a different stage of its program (as compared to SLFRF) and has
a different process for distribution of funds.
• Specifically, CPF reviews and approves program plans prior to
approval and distribution of funds.
• CPF is currently in the process of receiving and evaluating grant
plans submitted by tribes and states.
• CPF administrative funds are currently available to state
recipients to draw down as needed. Project funds are made
available to a state after Treasury approves at least one
program plan. To date, seven states have drawn down funds,
one of which was for project funds. 8 Tribal government awards
are paid in full after Treasury approves a tribal application and
executes a grant award.
• CPF specifically asks potential recipients: “How is the program
designed so that it does not duplicate investments from
enforceable federal or state funding commitments for reliable
wireline service at speeds of at least 100 Mbps of download
speed and 20 Mbps of upload speed (e.g., program requirement,
state law, process)?”
• CPF’s guidance states that any investment in an area with
existing service or an enforceable commitment must provide an
8
As of Treasury’s response dated August 18, 2022.
5
“additional public benefit,” and be “complementary.”
• Also like SLFRF, CPF encourages recipients to prioritize projects
that are designed to provide service to households and
businesses not currently served by a wireline connection that
reliably delivers at least 100/20 Mbps.
b. To what extent is Treasury monitoring state, local, and tribal governments’
efforts to connect unserved households and locations?
Treasury Response:
Treasury is closely monitoring recipient spending on broadband infrastructure
through its reporting and compliance process. As part of this process,
Treasury is monitoring whether recipients are meeting program requirements,
including ensuring that completed broadband projects provide service that
reliably meets or exceeds symmetrical upload and download speeds of 100
Mbps where practicable. 9
As previously noted, SLFRF has begun to receive P&E reports from all
recipients.
• For context, on April 30, 2022, during the first P&E reporting
period, tens of thousands of SLFRF recipients submitted data,
and the SLFRF program personnel performed compliance
reviews of this data. SLFRF program personnel continue to
perform compliance reviews as recipients submit P&E reports.
• SLFRF personnel have provided OIG with details regarding the
compliance flow, but at a high level. The review process is
intended to first address data integrity issues and then proceed
to compliance testing and reviews designed to identify waste,
fraud, and abuse.
SLFRF’s P&E reporting to date includes a number of compliance-related
broadband fields; as an example, one of those fields asks whether
recipients are designing broadband projects that deliver reliable
symmetrical upload and download speeds of 100 Mbps where practicable.
Treasury will be adding additional programmatic broadband fields in
9
See footnote 6 for SLFRF recipients’ broadband requirements.)
6
upcoming reporting cycles.
Further, Treasury voluntarily signed an MOU with FCC, NTIA and USDA
to, among other things, develop consistent and complementary reporting
processes and share information with each other about broadband
projects.
CPF has finalized its compliance and reporting guidance, 10 which will be
the foundation for recipient reporting and monitoring to follow in due
course. Treasury’s CPF program office and recipient monitoring group
will develop the compliance testing process using the internal “Office of
Recovery Programs (ORP) Award Management Policy for Financial
Assistance Recovery Programs, Version 1.0,” (dated July 15, 2022) as
overall guidance. Compliance testing will be consistent with the
approach used for other ORP programs.
c. What information is Treasury receiving from state, local, and tribal
governments about their broadband deployment projects?
Treasury Response:
Please see below for information on each of the programs:
• For the CPF program, recipients must submit a plan for deploying
CPF grant funding that provides information on the recipient’s
intended uses of CPF funds. A Grant Plan consists of an
executive summary, an Allocation Table showing the broad
categories of capital projects the recipient seeks to undertake
using CPF grant funds and how much the recipient intends to
spend on each such category, and one or more Program Plans,
which describe the specific capital projects in the category the
recipient is seeking funding for. 11 Each Program Plan constitutes
an applicant’s request for funding for those capital projects.
Treasury assesses and approves each Program Plan separately and
will separately provide access to funds for each Program Plan when
approved.
10
“Coronavirus Capital Projects Fund: Compliance and Reporting Guidance for States, Territories, and Freely
Associated States,”(https://home.treasury.gov/system/files/136/CPF-Reporting-Guidance-for-States.pdf).
11
https://home.treasury.gov/system/files/136/CPF-Grant-Program-Plan.pdf
7
• For the SLFRF program, recipients must provide periodic reporting
on their broadband infrastructure projects, including on obligations
and expenditures, project status, construction and operations
start dates, location, labor practices, and compliance with final rule
requirements. In addition, Treasury’s compliance and reporting
guidance on SLFRF notes that, for the purposes of facilitating
that collection of consistent broadband data across government
programs, “additional programmatic data will be required for
broadband projects beginning in July 2022 and will be defined in a
subsequent version of the Reporting Guidance.” On June 10,
2022, the compliance and reporting guidance was updated to
incorporate these additional requirements. 12
d. What data sources about broadband coverage and availability were used to
inform how and in what manner Treasury distributed broadband funds to
state, local, and tribal governments?
Treasury Response:
Treasury allocated funds among SLFRF and CPF recipients according to the
respective formulas outlined in statute. Sections 602 and 603 of the
Social Security Act provide allocation formulas for the SLFRF program for
states, territories, counties, metropolitan cities, non-entitlement units of
local government, and Tribal governments. Section 604 of the Social
Security Act provides an allocation formula for the CPF program for states,
territories, freely associated states, and Tribal governments.
For SLFRF and for CPF, the statute requires Treasury to allocate funding
based on a statutory formula (which differs for each type of recipient)
which does not include consideration of broadband coverage and
availability.
e. What level of coordination is occurring between the Federal Communications
Commission, the Treasury, the U.S. Department of Agriculture, and the
National Telecommunications and Information Administration to protect
against overbuilding and duplication of funding awards?
12
Since the June 10, 2022 version, Treasury has made additional updates to its “Compliance and Reporting
Guidance: State and Local Fiscal Recovery Funds.” (https://home.treasury.gov/system/files/136/SLFRF-
Compliance-and-Reporting-Guidance.pdf).
8
Treasury Response:
Treasury recognizes the importance of coordinating with other federal
agencies making investments in broadband and connectivity. Treasury has a
strong working relationship with the FCC, NTIA, and USDA, including
participating in biweekly interagency meetings to share data and information.
Treasury has also closely coordinated with these agencies in developing its
broadband performance metrics. Finally, Treasury participates in the
broadband coordination group, which the National Economic Council hosts on
a biweekly basis.
As mentioned earlier, Treasury also voluntarily signed an MOU with FCC,
NTIA and USDA to, among other things, develop consistent and
complementary reporting processes and share information with each
other about broadband projects.
f. What, if any, federal, state, or local regulatory barriers are impeding or
increasing costs to broadband deployment funded by these programs?
Treasury Response:
Treasury has not identified such barriers, but continues to work with
the FCC, NTIA, and USDA, to learn lessons about broadband
deployment.
g. What oversight measures is Treasury implementing to ensure providers meet
their buildout obligations?
Treasury Response:
Please see the responses to questions 1.b and 1.c.
h. What additional protections, if any, should Congress consider to ensure funds
go to unserved communities instead of those that already have broadband?
Treasury Response:
Treasury allows recipients to pursue broadband infrastructure projects that
provide service to locations with an identified need for investment. Treasury
also coordinates with other federal agencies making investments in
broadband and connectivity.
9
SLFRF and CPF guidance both provide for the deployment of funds to
bring broadband of at least 100 Mbps symmetrical upload and download
speeds, where practicable, to communities that need it. This speed
threshold accounts for increased pandemic internet usage and provides
adequate upload speeds for individuals and businesses to accommodate
interactive applications such as virtual learning and videoconferencing,
while also helping ensure that funding is responsibly used to provide a
true and lasting benefit for years to come.
As discussed, SLFRF requires all projects to be designed to meet a need
for additional broadband infrastructure investment and does not allow for
funding to go to projects that do not meet that threshold.
CPF requires that projects in areas that have existing commitment
provide an “additional public benefit”.
Treasury believes this framework is appropriate and sufficient and does
not believe additional protections are required at this time.
If you have questions regarding Treasury’s responses to this inquiry, we are
available to discuss the matters contained in this letter.
Sincerely,
Richard K. Delmar
Deputy Inspector General
Department of the Treasury
10
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